Signs of financial distress appear in SME’s late payments

In Ireland, a quarter of those chasing bills owed more than 40,000 euros, while more than a third owed 21,000 euros – 40,000 euros.

As a result, nearly half of the affected companies experienced a more than 10 percent drop in annual revenue.

The study comes as the Government’s Covid support programs come to an end, drawing hundreds of millions of dollars in direct subsidies from the sectors hardest hit by the pandemic.

In January, an ESRI report led by Martina Lawless estimated that the level of financial hardship in small and medium-sized businesses would be 72 percent higher without the nearly 10 billion euros in Government wage subsidies. country as of March 2020.

According to ESRI, insolvency rates have also fallen below “natural” levels during the pandemic, suggesting that subsidies can also mask the true extent of cash flow problems in many businesses. . In fact, the number of loss-making SMEs has increased by 50 percent in the past two years.

Analysts and industry bodies have warned that potential financial distress could now begin to emerge among SMEs as they transition to a disrupted post-Covid economy. by inflation, the energy crisis and rising funding costs.

That happened in the UK, where business support was cut last September and voluntary defaults hit a 60-year high later this year.

Banks, which provided loan-free loans to 10 percent of their SME customers at the start of the pandemic, are now issuing conservative terms to boost profits and pay shareholders as economic conditions normal chemical.

Obviously, not every business can thrive in the new environment, and lenders may not be forgiving, as the recent takeover by engineering firm Roadbridge points out.

In addition, Strategic Banking Corporation of Ireland (SBCI) and Finance Ireland have announced a new €75 million discount loan fund for small and medium-sized businesses.

The fund will finance qualified small and medium-sized businesses at about 1 percent less than the usual rate of comparable commercial loans.

Acting as a re-lender of state funds, Finance Ireland will provide financing of up to 1 million euros to small and medium-sized businesses, including sole traders and farmers, through agreements. lease-purchase agreements, lease agreements, lease-lease agreements, sale and sublease of premises and farm loans.

The fund expands a seven-year partnership between SBCI and Finance Ireland, which has supported more than 4,000 small and medium businesses with more than 125 million euros. Finance Ireland is also part of the Government’s Covid-19 Credit Guarantee Scheme, run by the SBCI.